Spotify Falls After Missing Subscriber Mark

Shares of music streaming service Spotify drop after it reports a narrower second-quarter loss that beats analysts' forecasts but monthly subscriber growth that falls short.
By M. Corey Goldman ,

Music streaming service Spotify (SPOT) - Get Report  missed the mark on Wednesday after it reported a narrower second-quarter loss that beat analysts' forecasts but paid monthly subscriber gains that did not.

The Stockholm-based company posted a net loss of €76 million, or 42 cents a share, vs. a net loss of €394 million, or €2.20 a share, in the comparable year-ago period. Analysts polled by FactSet had been expecting a loss of 47 cents a share. Revenue was €1.67 billion, up from €1.27 billion in the second quarter of 2018.

Monthly average subscribers, or MAUs, rose 29% year on year to 232 million, outperforming the high end of the company's 222 million to 228 million MAU guidance range. The company added 8 million paying subscribers during the quarter, bringing the total number of premium subscribers globally up to 108 million.

That was up 31% year on year but below the midpoint of its guidance of 107 million to 110 million.

It reported 232 million total monthly active users in the second quarter, up 7% from the previous quarter and up 29% year over year. Total monthly active users includes premium subscribers as well as users of its free, ad-supported tier.

For the third quarter, Spotify expects to add 4 million paying subscribers, based on the midpoint of its guidance, with MAUs of between 240 million and 245 million. Third-quarte operating earnings are expected to be between a €2 million profit and a €78 million loss on revenue of between €1.57 billion and €1.77 billion.

For the final quarter of the year, the company expects to post an operating loss between €31 million and €131 million on revenue of between €1.74 billion and €1.94 billion and MAUs of between 250 million and 265 million.

Shares of Spotify were down 3.07% at $150.44 in mid-morning trading on the New York Stock Exchange. 

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